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You probably missed the following little news item, lost in all the screaming red headlines of recent days.

It has important implications for our understanding of what our so-called Clean Energy Future will really look like, under the government’s carbon pricing scheme scam.

Because as we have previously seen from the details buried in the government’s official website, their “carbon pricing mechanism” is nothing whatsoever to do with “saving the planet”.

Instead, it is all about preparing the way for international banking’s latest casino – carbon dioxide futures and derivatives trading.

A mega-casino with trading via the bankers favourite new toy, HFT (High-Frequency Trading) – advanced computerised platforms directly linked into the stock exchanges and able to execute fully-automated trades in under 10 milliseconds.

… automated trading programs have been known to cause rapid and short-term fluctuations in the prices of securities or so-called “flash crashes”, which have become an increasingly-noticed feature of financial markets.

To briefly summarise, this is what we found buried in the government’s new website, regarding derivatives:

The “creation of equitable interests”, and “taking security over them”, simply means this. The carbon permits can be used as the basis for bankers to create other, new financial “securities”.

Carbon derivatives, in other words.

Derivatives (or “securities”) are the toxic, wholly-artificial financial “products” that were at the heart of the GFC. The same bankster-designed “widgets” that the world’s most famous investor, Warren Buffet, spoke of as “a mega-catastrophic risk”, “financial weapons of mass destruction”, and a “time bomb”.

You can stop reading this piece right now if you like.

Because from that Table 6 alone, you now have conclusive proof that this is nothing whatsoever to do with the climate.

We also identified that setting up the basis for a carbon futures market is part and parcel of the “mechanism”:

Furthermore, the “advance auctions of flexible price permits in the fixed price period” proves beyond all shadow of doubt, that I was right.

That this “carbon pricing mechanism” is the bankers’ CPRS by another name. From Day 1.

From Day 1, the government is effectively allowing the setting up of a futures trading market, for Australian CO2 permits.

Futures trading of nothing. Before the nothing is even created.

Now, one could try to argue that the government’s documentation quoted above and in more detail in my analyses, does not actually use the specific word “derivatives”, or “futures”.

And so, one could try to argue that I have no concrete proof. That I have simply inferred that “creation of equitable interests” and “taking security over them” means “derivatives”, but if the government has not used those exact words, then I might just be making it all up.

Dear reader, if there is any lingering doubt in your mind that the Green-Labor government is setting up a scheme purposefully-designed to serve as the basis for carbon derivatives and futures trading, then doubt no longer.

In consultations undertaken on this issue for previous proposals, most stakeholders supported the auction of future year vintages as future vintages may be an alternative to the spot market and any associated derivative markets for liable entities seeking to manage future emissions obligations.

…

Advance auctions of future vintages are not required for carbon futures prices to emerge. For example, derivative markets have developed in the European Union Emissions Trading Scheme without advance auctions.

Assessment

The preferred position is that there will be advanced auctions of future vintage permits.

So there you have it.

The government’s scheme is all about putting in place the necessary laws to allow banksters the legal right to create trillions of new carbon “securities” – that is, new carbon derivatives, and futures “products”.

The kind of “products” that lead to “flash crashes” which can wipe out 98% of the sharemarket value of one of the world’s biggest mining companies in less than 4 minutes.

Brilliant, isn’t it?

And do not doubt for a moment, dear reader, just how many carbon dioxide derivatives the bankers can (and will) create.

To give you just a tiny hint of the scale, take a look at the following graph of our Aussie banks’ total Off-Balance Sheet derivatives based on Foreign Exchange and Interest Rate bets (euphemistically called “hedges”, of course), current to end March 2011:

According to David Bloom, global head of HSBC Foreign Exchange, our banks are racing towards “a bigger Armageddon” in foreign exchange markets … and they are racing towards it sitting atop that monster red line mountain of derivatives bets.

Try to imagine if you will, just how many derivatives that international (and local) bankers will create on top of the underlying “value” of Australia’s $23 starting price carbon “permits”, from the moment that the Brown-Gillard economic planking platform is rammed through Parliament.

And then, think carefully about the words of that Goldman trader just a couple of days ago, when one of the world’s largest miners almost vapourised off the sharemarket in 4 minutes flat.

It’s unfortunate that this very very important issue was not presented in a more comprehensible manner, people get carried away with words of fill in “chatter”. i am sure it could be reduced to a single printed page, and in language more suitable for the “masses”.Wall street speak of technical detail confuses people, this matter is too important not to be understood. Warren Roche..

Thanks Warren … you are more than welcome to write up a Guest Post on this topic, and explain it better for readers. Cheers.

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